Growth strategy cases ask a deceptively simple question: where is the next chunk of revenue going to come from? This management consulting case study puts that question to a specialty chemicals division whose whole market is barely moving.
Case Scenario
The client is a $250 million division of a $7 billion specialty chemicals company. The CEO believes that his company can become the fastest-growing chemical company in the world. He has asked the business units to develop and present growth strategies to him.
Key Questions
How would you determine whether the Performance Chemicals segment of the business can expand at a pace of 10% or more each year? How are you going to address this issue? What prospective growth plans and suggestions do you have for the performance chemicals sector?
Possible Approaches and Key Issues
Consider the market size, competition and targeted customers. For the past five years, all six companies in the segment have seen growth of 3-4%. The expansion of these companies is being hampered by commoditisation and competitive pricing pressures. It is obvious that in order to achieve the required growth, the organisation must move beyond a standard product strategy, for instance towards outsourcing or product-service packages.
Are there any cultural barriers preventing development? Like any other chemical firm, the business has yet to look for expansion ideas, focusing only on product sales.
Create a straightforward framework to investigate growth prospects. The growth spectrum may encompass new markets, new channels, new business models, new products, and product enhancements. Some of the options that come out of it:
- Promote a service rather than a product
- Become a crucial customer's go-to supplier
- Achieve the status of a one-stop shop for specialty chemicals, with a customer-serving vendor-managed inventory system
Conclusion
To determine the possibility of quadrupling the Performance Chemicals group's size to $1 billion in five years, we performed a growth diagnostic on the organisation. The client adopted several of the methods after accepting the consulting team's advice. Product-service bundles, outsourcing, and new markets for the available technology skills are a few of them.
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